1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
COMMISSION FILE NUMBER: 000-24539
ECLIPSYS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 65-0632092
(State of Incorporation) (IRS Employer Identification
Number)
777 East Atlantic Avenue
Suite 200
Delray Beach, Florida
33483
(Address of principal executive offices)
(561)-243-1440
(Telephone number of registrant)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Class Shares outstanding as of July 31,1999
------ -------------------------------------
Common Stock, $.01 par value 34,941,723
Non-voting Common Stock, $.01 par value 597,621
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ECLIPSYS CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1999
INDEX
PART I. Financial Information
Item 1. Condensed Consolidated Balance Sheets (unaudited) - As of June 30, 1999 and
December 31, 1998
Condensed Consolidated Statements of Operations (unaudited) - For the Three
and Six Months ended June 30, 1999 and 1998
Condensed Consolidated Statements of Cash Flows (unaudited) - For the Six
Months ended June 30, 1999 and 1998
Notes to Condensed Consolidated Financial Statements (unaudited) - For the
Three and Six Months ended June 30, 1999 and 1998
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
3
PART I.
ITEM 1.
ECLISPSYS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1999 AND DECEMBER 31, 1998
(IN THOUSANDS)
(UNAUDITED)
ASSETS JUNE 30, 1999 DECEMBER 31, 1998
------------------------- ------------------------
Current assets:
Cash and cash equivalents $ 23,111 $ 37,983
Investments - 17,003
Accounts receivable, net 76,471 62,324
Inventory 506 517
Other current assets 11,869 10,013
------------------------- ------------------------
TOTAL CURRENT ASSETS 111,957 127,840
Fixed assets, net 14,105 12,620
Capitalized software development costs, net 4,730 5,248
Acquired technology, net 50,434 43,318
Intangible assets, net 21,501 25,928
Other assets 5,623 6,060
------------------------- ------------------------
TOTAL ASSETS $ 208,350 $ 221,014
========================= ========================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Deferred revenue $ 57,917 $ 51,366
Other current liabilities 42,083 48,565
------------------------- ------------------------
TOTAL CURRENT LIABILITIES 100,000 99,931
Deferred revenue 7,292 16,700
Other long-term liabilities 3,752 3,756
SHAREHOLDERS' EQUITY
Common stock 353 335
Common stock warrant 395 395
Unearned stock compensation (392) (1,623)
Additional paid-in capital 249,684 244,165
Accumulated other comprehensive income 180 44
Accumulated deficit (152,914) (142,689)
------------------------- ------------------------
TOTAL SHAREHOLDERS' EQUITY 97,306 100,627
------------------------- ------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 208,350 $ 221,014
========================= ========================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
4
ECLIPSYS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------------ --------------------------------------
1999 1998 1999 1998
---- ---- ---- ----
REVENUES
Systems and services $ 57,856 $ 39,264 $ 109,736 $ 76,173
Hardware 3,970 3,357 9,468 5,647
------------------------------------ --------------------------------------
TOTAL REVENUES 61,826 42,621 119,204 81,820
==================================== ======================================
COSTS AND EXPENSES
Cost of systems and services revenues 32,380 23,153 61,142 45,221
Cost of hardware revenues 3,343 2,773 8,013 4,750
Marketing and sales 8,798 6,897 16,563 13,359
Research and development 14,205 8,509 24,094 16,736
General and administrative 3,040 2,226 6,105 5,034
Depreciation and amortization 3,887 2,866 7,731 5,857
Stock compensation charge 1,005 1,005
Write off of MSA - - - 7,193
Restructuring charge 3,359 - 3,359 -
Pooling costs 1,034 - 1,648 -
------------------------------------ --------------------------------------
TOTAL COSTS AND EXPENSES 71,051 46,424 129,660 98,150
------------------------------------ --------------------------------------
------------------------------------ --------------------------------------
LOSS FROM OPERATIONS (9,225) (3,803) (10,456) (16,330)
------------------------------------ --------------------------------------
Interest income, net (165) (594) (608) (1,039)
LOSS BEFORE INCOME TAXES (9,060) (3,209) (9,848) (15,291)
PROVISION FOR INCOME TAXES - 1,185 - 3,106
==================================== ======================================
NET LOSS (9,060) (4,394) (9,848) (18,397)
==================================== ======================================
DIVIDENDS AND ACCRETION ON MANDATORILY
REDEEMABLE PREFERRED STOCK - (1,178) - (2,513)
------------------------------------ --------------------------------------
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS $ (9,060) $ (5,572) $ (9,848) $ (20,910)
==================================== ======================================
BASIC AND DILUTED NET LOSS PER COMMON SHARE $ (0.26) $ (0.31) $ (0.29) $ (1.18)
==================================== ======================================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 34,984,000 17,941,000 34,337,000 17,691,000
==================================== ======================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
5
ECLIPSYS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(IN THOUSANDS)
(UNAUDITED)
SIX MONTHS ENDED JUNE 30,
-----------------------------------------------
1999 1998
-------------------- ----------------------
OPERATING ACTIVITIES
Net Loss $ (9,848) $ (18,397)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities
Depreciation and amortization 20,984 14,601
Provision for bad debts 1,576 453
Loss on sale of fixed assets - 8
Tax benefit of stock option exercises - 411
Write off of MSA - 7,193
Write off of capitalized software development costs 2,790 -
Stock compensation expense 1,232 36
Changes in operating assets and liabilities, net of acquisitions
Accounts receivable (7,124) (3,712)
Inventory 11 256
Other current assets (1,218) 2,503
Other assets 116 (520)
Deferred revenue (5,934) 16,640
Other current liabilities (7,365) 577
Other liabilities (4) (48)
==================== ======================
Total adjustments to reconcile net loss to net
cash provided by (used in) operating activities 5,064 38,398
-------------------- ----------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (4,784) 20,001
==================== ======================
INVESTING ACTIVITIES
Purchase of fixed assets (4,339) (4,115)
Capitalized software development costs (3,047) (2,160)
Acquisitions, net of cash acquired (25,000) -
Changes in other assets - (21,565)
-------------------- ----------------------
NET CASH USED IN INVESTING ACTIVITIES (32,386) (27,840)
==================== ======================
FINANCING ACTIVITIES
Borrowings 20,000 17,000
Payments on borrowings (20,000) (12,794)
Exercise of stock options 4,344 1,216
Sale of preferred stock - 9,000
Employee stock purchase plan 1,192 59
Distributions (377)
-------------------- ----------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 5,159 14,481
==================== ======================
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS 136 10
==================== ======================
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (31,875) 6,652
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 54,986 63,414
-------------------- ----------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 23,111 $ 70,066
==================== ======================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART TO THESE UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
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ECLIPSYS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
1. BASIS OF PRESENTATION
The condensed consolidated financial statements include all adjustments
that, in the opinion of management, are necessary for a fair
presentation of the results for the periods presented. All such
adjustments are considered of a normal recurring nature. Quarterly
results of operations are not necessarily indicative of annual results.
Effective December 31, 1998, Eclipsys Corporation ("the Company")
completed a merger with Transition Systems, Inc. ("Transition").
Effective February 17, 1999, the Company completed a merger with
PowerCenter Systems, Inc. ("PCS"). Effective June 17, 1999, the Company
completed a merger with MSI Solutions, Inc. ("MSI"). Each of these
mergers were accounted for as a pooling of interests and, accordingly,
the condensed consolidated financial statements have been retroactively
restated as if the mergers had occurred as of the beginning of the
earliest period presented.
Certain financial information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. These
unaudited condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and the notes
thereto included in the Company's Annual Report on Form 10-K dated
March 26, 1999.
Certain prior year amounts have been reclassified to conform to the
current year presentation in the accompanying condensed consolidated
financial statements.
2. ACQUISITIONS
As discussed in Note 1, effective June 17, 1999, the Company completed
a merger with MSI for total consideration of approximately $53.6
million. MSI provides web-enabling and integration software.
7
ECLIPSYS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
The Transition, PCS and MSI acquisitions discussed in Note 1 were
accounted for as poolings of interests, accordingly, all prior period
amounts have been restated. A reconciliation between revenue and net
loss as previously reported by the Company and as restated (unaudited)
is as follows:
For the three For the six
months ended months ended
Revenue: June 30, 1998 June 30, 1998
------------- -------------
As previously reported $32,289 $61,583
Transition 7,215 14,945
PCS 553 670
MSI 2,564 4,622
----------- -----------
As restated $42,621 $81,820
Net Loss:
As previously reported $(3,212) $(14,822)
Transition (1,463) (3,427)
PCS (261) (955)
MSI 542 807
------------ ------------
As restated $(4,394) $(18,397)
Effective March 31, 1999, the Company acquired the common stock of
Intelus Corporation ("Intelus") and Med Data Systems, Inc. ("Med
Data"), both wholly owned subsidiaries of Sungard Data Systems, Inc.
for total consideration of $25 million in cash. The acquired entities
both provide document imaging technology and workflow solutions to
entities throughout the healthcare industry. The acquisition was
accounted for as a purchase and, accordingly, the purchase price was
allocated based on the fair value of the net assets acquired.
Unaudited pro forma results of operations as if the aforementioned
acquisitions had occurred on January 1, 1998 is as follows (in
thousands except per share data):
Six months ended
June 30,
1999 1998
------------------------------
Revenues $122,695 $ 95,960
Net loss $(10,287) $(24,597)
Basic and diluted loss per share $(.30) $(1.53)
3. POOLING COSTS
Included in operating activities on the accompanying condensed
consolidated statement of cash flows for the six months ended June 30,
1999 are $1.3 million of costs paid related to the poolings of
Transition, PCS and MSI.
8
ECLIPSYS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
4. RESTRUCTURING
During the quarter ended June 30, 1999, the Company initiated a
restructure of its organization. In connection with the restructure,
the Company incurred costs related to the closing of duplicate
facilities and the termination of certain employees. The restructuring
is expected to be completed during the quarter ending September 30,
1999. Costs aggregating approximately $3.4 million were incurred during
the quarter ended June 30, 1999, costs ranging from approximately
$1.0 million to $1.4 million are expected to be incurred during the
quarter ended September 30, 1999 related to the completion of these
activities.
As of June 30, 1999 accrued restructuring costs of $713,000 are
included in other current liabilities in the accompanying condensed
consolidated balance sheet. Included in operating activities on the
accompanying condensed consolidated statement of cash flows for the six
months ended June 30, 1999 are $1.1 million of costs paid related to
the restructuring.
5. STOCK COMPENSATION CHARGE
From time to time, the Company has granted options below fair market
value and, accordingly, has recorded unearned stock compensation and
recognizes stock compensation expense over the vesting period of the
related options.
In connection with the pooling of MSI, the Company incurred an
additional stock compensation charge of $1.0 million related to the
required accelerated vesting of certain options that were granted by
MSI.
6. CAPITALIZED SOFTWARE DEVELOPMENT COSTS
In connection with the pooling of MSI, the Company wrote off $2.8
million of capitalized software development costs related to duplicate
products.
7. SUBSEQUENT EVENTS
Effective July 1, 1999, the Company sold Med Data for total
consideration of $5.0 million. The Company will reduce acquired
technology during the quarter ending September 30, 1999 by $4.4
million, which represents the difference between the sales price and
the net assets sold.
During July 1999, the Company invested in HEALTHvision, Inc., a Dallas
based , privately held internet healthcare company, in conjunction with
VHA, Inc. and General Atlantic Partners, LLC. The Company purchased
3,400,000 shares of common stock for $34,000, which represents 34% of
the outstanding stock of HEALTHvision, Inc. and will account for the
investment using the equity method of accounting.
9
PART I.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This report contains forward-looking statements. For this purpose, any
statements contained herein that are not statements of historical fact
may be deemed to be forward-looking statements. Without limiting the
foregoing, the words "believes," "anticipates," "plans," "expects,"
"intends," and similar expressions are intended to identify
forward-looking statements. The important factors discussed under the
caption "Certain Factors that May Affect Future Operating Results/Risk
Factors," presented from time to time in the Company's filings with the
Securities and Exchange Commission, among others, could cause actual
results to differ materially from those indicated by forward-looking
statements made herein. The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
OVERVIEW
Eclipsys Corporation ("Eclipsys" or "the Company") is a healthcare
information technology company delivering solutions that enable
healthcare providers to achieve improved clinical, financial and
administrative outcomes. The Company offers an integrated suite of core
products in five critical areas - clinical management, access
management, patient financial management, strategic decision support
and integration. These products can be purchased in combination to
provide an enterprise-wide solution or individually to address specific
needs. Eclipsys' products have been designed specifically to deliver a
measurable impact on outcomes, enabling Eclipsys' customers to quantify
clinical benefits and return on investment in a precise and timely
manner. Eclipsys' products can be integrated with a customer's existing
information systems, which Eclipsys believes reduces overall cost of
ownership and increases the attractiveness of its products. Eclipsys
also provides outsourcing, remote processing and networking services to
assist customers in meeting their healthcare information technology
requirements. Eclipsys markets its products primarily to large
hospitals, academic medical centers and integrated health networks. To
provide direct and sustained customer contact, Eclipsys maintains
decentralized sales, implementation and customer support teams in each
of its seven North American regions.
10
The Company was formed in December 1995 and has grown primarily through
a series of acquisitions as follows:
METHOD OF
TRANSACTION DATE ACCOUNTING
----------- ---- ----------
ALLTEL Healthcare Information Services, Inc. 1/24/97 Purchase
("Alltel")
SDK Medical Computer Services Corporation 6/26/97 Purchase
("SDK")
Emtek Healthcare Systems 1/30/98 Purchase
("Emtek") a division of Motorola, Inc.
HealthVISION, Inc. 12/1/98 Purchase
("HealthVISION")
Transition Systems, Inc. 12/31/98 Pooling
("TSI")
PowerCenter Systems, Inc. 2/17/99 Pooling
("PCS")
Intelus Corporation and Med Data Systems, Inc. 3/31/99 Purchase
("Intelus" and Med Data") wholly owned
subsidiaries of Sungard Data Systems, Inc.
MSI Solutions, Inc. 6/17/99 Pooling
("MSI")
The condensed consolidated financial statements of the Company reflect
the financial results of the purchased entities from the respective
dates of the purchase. For all transactions accounted for using the
pooling of interests method, the Company's condensed consolidated
financial statements have been retroactively restated as if the
transactions had occurred as of the beginning of the earliest period
presented.
RESULTS OF OPERATIONS
SUMMARY
Total revenues for the quarter ended June 30, 1999 increased 45% to
$61.8 million compared with $42.6 million for the second quarter 1998.
For the six months ended June 30, 1999 total revenues increased 46% to
$119.2 million compared to $81.8 million for the same period in 1998.
Total costs and expenses for the quarter ended June 30, 1999 increased
53% compared to the same period in 1998. For the six months ended June
30, 1999 total costs and expenses increased 32% compared to the six
months ended June 30, 1998.
11
These changes in revenues and expenses combined to increase net loss
for the quarter ended June 30, 1999 by 106% to ($9.1) million compared
to the same period in 1998. Included in the reported quarterly net
losses were acquisition related amortization of intangible assets and
certain non-recurring charges recorded in connection with the
acquisitions of $16.9 million and $4.9 million, for the quarter ended
June 30, 1999 and 1998, respectively.
Year to date changes in revenues and expenses combined to decrease net
loss for the six months ended June 30, 1999 by 46% to ($9.8) million
compared to the same period in 1998. Included in the reported six month
net losses were acquisition related amortization of intangible assets
and certain non-recurring charges recorded in connection with the
acquisitions of $25.0 million and $17.4 million for the six months
ended June 30, 1999 and 1998, respectively.
REVENUES
System and services revenues increased 47% to $57.9 million for the
second quarter of 1999 compared to the same period in 1998 and 44% to
$109.7 million for the six months ended June 30, 1999 compared to the
same period in 1998. Contributing to this increase was the inclusion of
the results of operations of HealthVISION, Intelus and Med Data during
the quarter and six months of 1999, as well as new contracted business
during 1998. The increase in new contracted business was a result of
increased marketing efforts related to the regional re-alignment of the
Company's operations completed in 1997 and the integration of the
acquisitions.
Hardware revenues increased 18% to $4.0 million for the second quarter
of 1999 compared to the same period in 1998 and 68% to $9.5 million for
the six months ended June 30 ,1999 compared to the same period in 1998.
The increase was primarily due to increased volume as a result of the
acquisitions and new contracted business.
EXPENSES
Total cost of revenues increased 38% for the second quarter of 1999 and
year to date compared to the same periods in 1998. Increased costs of
system, services and hardware associated with the growth in sales were
partially offset by a reduction of certain expenses and realization of
cost savings as a result of the integration of the acquisitions.
Marketing and sales expenses increased 28% for the second quarter of
1999 compared to the same period in 1998 and 24% for the six months
ended June 30, 1999 compared to the same period in 1998. The increase
was primarily due to the addition of marketing and direct sales
personnel following the acquisitions and the continued hiring of sales
people.
Total expenditures for research and development, including both
capitalized and non-capitalized expenses increased 67% to $16.0 million
for the second quarter 1999 compared to the same period in 1998 and 44%
to $27.1 million for the six months ended June 30, 1999 compared to the
same period in 1998. The increase was due primarily to the
acquisitions, the write-off of $2.8 million of capitalized software
development costs related to duplicate products with no alternative
future use due to the acquisition of MSI and the continued development
of an enterprise-wide, client server platform solution. Research and
development expenses capitalized for the second quarter of 1999
increased $725,000 compared to the same period in 1998 and $887,000 for
the six months ended June 30, 1999 compared to the same period in 1998.
Increased capitalization was primarily the result of expenditures
related to the development of an enterprise-wide, client server
platform solution.
General and administrative expenses increased 37% for the second
quarter of 1999 compared to the same period in 1998 and 21% for the six
months ended June 30, 1999 compared to the same period in 1998. The
increase was primarily due to the addition of administrative and
finance personnel following the acquisitions.
12
Depreciation and amortization increased 36% for the second quarter of
1999 compared to the same period in 1998 and 32% for the six months
ended June 30, 1999 compared to the same period in 1998. The increase
for the quarter and year to date is primarily the result of an increase
in goodwill amortization as a result of the HealthVISION acquisition.
ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT
In connection with the Alltel, SDK and HealthVISION acquisitions, the
Company wrote off acquired in-process research and development totaling
$92.2 million and $7.0 million in 1997 and $2.4 million in 1998,
respectively. These amounts were expensed as non-recurring charges on
the respective acquisition dates. The Company continues to believe that
the acquired in-process research and development will be successfully
developed, but there can be no assurance that commercial viability of
these products will be achieved.
The value of the acquired in-process research and development was
determined by estimating the projected net cash flows related to such
products, including costs to complete the development of the technology
and the future revenues to be earned upon commercialization of the
products. These cash flows were discounted back to their net present
value. The resulting projected net cash flows from such projects were
based on management's estimates of revenues and operating profits
related to such projects.
Through June 30, 1999, revenues and operating profit attributable to
acquired in-process research and development have not materially
differed from the projections used in determining its value, except
for, as previously reported, the timing of one outsourcing contract.
Management continues to believe the projections used reasonably
estimate the future benefits attributable to the acquired in-process
research and development. However, no assurance can be given that
deviations from these projections will not occur.
YEAR 2000 ISSUES
Eclipsys has a Year 2000 Committee whose task is to evaluate the
Company's Year 2000 readiness for both internal and external management
information systems, recommend a plan of action to minimize disruption
and execute the Company's Year 2000 plan. The Committee has developed a
comprehensive Year 2000 Plan. The Year 2000 Plan covers all significant
internal and external management information systems.
Eclipsys believes that all of its significant internal management
information systems are currently Year 2000 compliant and, accordingly,
does not anticipate any significant expenditures to remediate or
replace existing internal-use systems.
With the exception of the Transition for Quality product (for which the
Company expects to release a fully Year 2000 compliant version in
1999), all of the products currently offered by Eclipsys are Year 2000
compliant. Some of the products previously sold by Alltel and Emtek and
installed in Eclipsys' customer base are not Year 2000 compliant.
Eclipsys has developed and tested solutions for these non-compliant,
installed products.
In addition, because Eclipsys' products are often interfaced with a
customer's existing third-party applications and certain Eclipsys'
products include software licensed from third-party vendors, Eclipsys'
products may experience difficulties interfacing with third-party,
non-compliant applications. Based on currently available information,
Eclipsys does not expect the cost of compliance related to interactions
with non-compliant, third party systems to be material.
13
Unexpected difficulties in implementing Year 2000 solutions for the
installed Alltel or Emtek products or difficulties in interfacing with
third-party products could adversely effect the Company.
Apprehension in the marketplace over Year 2000 compliance issues may
lead businesses, including customers of the Company, to defer
significant capital investments in information technology programs and
software. They could elect to defer those investments either because
they decide to focus their capital budgets on the expenditures
necessary to bring their own existing systems into compliance or
because they wish to purchase only software with a proven ability to
process data after 1999. If these deferrals are significant, the
Company may not achieve expected revenue or earnings levels.
BALANCE SHEET
INVESTMENTS
Investments decreased during the six months ended June 30, 1999 due to
the Company's reinvestment of maturities in highly liquid investments
with original maturities of three months or less.
ACCOUNTS RECEIVABLE
Accounts receivables increased during the six months ended June 30,
1999 primarily due to the acquisitions of Intelus and Med Data and with
activities related to the integration of TSI.
ACQUIRED TECHNOLOGY
Acquired Technology increased during the six months ended June 30, 1999
due to the acquisitions of Intelus and Med Data.
OTHER CURRENT LIABILITIES
Other current liabilities decreased during the six months ended June
30, 1999 due to the timing of payments related to accounts payable and
accrued expenses acquired from the acquisitions of TSI, Intelus and Med
Data, and the payment of certain employee related expenses.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended June 30, 1999, the Company used $4.8
million in cash flow from operations. Included in operations are
approximately $1.3 million of costs paid directly related to the
poolings of Transition, PCS and MSI. Additionally, the Company paid
approximately $1.1 million of severance related to restructuring during
the six months ended June 30, 1999. The Company used $32.4 million for
investing activities, which was primarily the result of the
acquisitions of Intelus and Med Data. Financing activities provided
$5.2 million, primarily due to the exercise of stock options and the
employee stock purchase plan.
As of June 30, 1999, the Company had no amounts outstanding under its
$50.0 million revolving credit facility.
As of June 30, 1999, the Company had $23.1 million in cash and cash
equivalents.
Management believes that its available cash and cash equivalents,
anticipated cash generated from its future operations and amounts
available under the existing revolving credit facility will be
sufficient to meet the Company's operating requirements for at least
the next twelve months.
14
PART II.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: See Index to exhibits.
(b) Reports on Form 8-K: None
15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
ECLIPSYS CORPORATION
Date: August 12, 1999 /s/ Robert J. Vanaria
---------------------
Robert J. Vanaria
Chief Financial Officer
16
ECLIPSYS CORPORATION
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
------- -----------
2 Agreement and Plan of Merger dated as of June 17, 1999 by and among
Eclipsys Corporation, Eclipsys Merger Corp., MSI Solutions, Inc., MSI Integrated
Services, Inc., Anna L. Bean, Michael R. Cote, Robert J. Feldman and The 1997
Feldman Family Trust
27 Financial Data Schedule (for SEC use only).